Buzz Bits: Dow and Nasdaq End Higher

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Editor's Note: This is a small sample of the content available on the Buzz & Banter.Is THIS a possibility?? - Bennet Sedacca - 3:34 PM

What? I have been long and still am long tons of agency preferreds. For a few weeks around Thanksgiving, I honestly wondered why as they were falling. Thankfully, I hung in there and all day I hear from dealers (because they know I own), "please offer FNM Q, FRE T, FRE Y, etc.

Then, I see the homies spike. And Fannie Mae (FNM) and Freddie mac (FRE) follow suit. Then futes catch fire.

Could it be that it is time to nationalize FNM and FRE? If I were running for President, I would be pushing for it. I mean, if you made FNM/FRE explicitly guaranteed, wouldn't that be a real help? Just thinking aloud here folks.

As we head down the stretch it has been a surprisingly positive day. Hotel stocks Marriott (MAR) and Starwood (HOT) have been off to the races all day. The Boyd Gaming (BYD) is breaking and even the tiny retailers Perry Ellis (PERY) and Rex Stores (RSC) are running. The regional F.N.B. (FNB) is pressing highs and the airlines are following through.

The laggard is Legg Mason (LM) which I just don't get, but I'll give it some time.

While it seems like everything is running here are a few things I have learned.

1) Don't be too quick to call it over. While I have brought you some runners this week, you have to remember that there are many out there fighting this tape or stuck in laggards. They will slowly come to the stocks that are working and it may continue to provide some fuel for a touch more.

2) Partial sells: When you see gains coming hot and heavy the best thing to do is methodically book them here and there by selling pieces into strength. Don't ever forget to take something out of Mr. Market when you have the opportunity.

Happy trading into the bell, Minyans, and I'll see you all in the morning.

Let's have a look at the near term pattern development in the XHB (Homebuilders ETF), which is being led by components Pulte Homes (PHM), Hovnanian (HOV), DR Horton (DHI), Home Depot (HD), KB Homes (KBH)... all of which have very dynamic chart formation after an entire year (or more) of relentless weakness.

The enclosed 4-hour chart is extremely promising from a technical perspective. Not only did the XHB exhibit very bullish form in its original advance from 15.07 (1/10) to 22.05 (1/29), the 1 1/2-session pullback into yesterday's late low at 19.55 also has the "right look" of a completed minor correction prior to the emergence of a new, powerful upleg.

Today's action shows that the price structure is flirting with breaking above 3-month resistance at 22.00, so...which when completed should trigger upside continuation to 24.50/90 thereafter. Although I bought into the breakout, which may prove frustrating if follow-through does not occur today, I would rather be long than out attempting to fine-tune the next dip.

So Google (GOOG) reports tonight, what do those options tell us? Well, it has been a tough earnings season to "guesstimate" in that the post-earnings options volatility is a bit tougher to predict than in normal cycles. But hey, let's take a stab at this GOOG.

Feb. volatility is pretty thrombotic as it sits in the mid 60's. GOOG options are always overpriced. 35 looks like a fair volatility after the number, so give it a little premium and we'll say it goes to 40. That implies maybe an 8-10% move after the number tonight. That's not a directional call, just a "breakeven" magnitude call. So in other words, if the pundits breathlessly report GOOG is moving like 20-30 points after the number, note that a number like that is pretty unexceptional and already more than anticipated by the market.

Position in GOOG

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